Forex: Euro Rallies On Greek Hopes- EU Meeting in Focus Ahead Of FOMC

The Euro continued to gain ground on Tuesday amid growing hopes surrounding Greece's bond-buyback program, and the single currency may continue to appreciate against its U.S. counterpart as market participants see the FOMC taking additional steps to encourage a stronger recovery.

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Euro: Greece To Meet Bond-Buyback Target, EU To Meet On Banking Union

British Pound: To Maintain Range Ahead Of BoE Minutes, Jobless Claims On Tap

Euro: Greece To Meet Bond-Buyback Target, EU To Meet On Banking Union

The EURUSD rallied to 1.2996 as government officials in Greece anticipate the bond-buyback program reaching close to the EUR 30B target, and positive headlines coming out of the periphery country may continue to prop up the single currency as European policy makers sees the region on a more sustainable path.

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At the same time, European Commission President Jose Barroso remains a hopeful that the group will come to a formal agreement on 'a single supervisory mechanism' this week as the EU heads to Brussels tomorrow, but the push for greater integration may fail to restore investor confidence should the governments operating under the monetary union struggle to meet on common ground.

In turn, the European Central Bank (ECB) may face additional pressure to expand monetary policy further in the following year, and the downturn in interest rate expectations continues to instill a bearish forecast for the EURUSD as the fundamental outlook for Europe remains bleak. As a result, we should see the 38.2% Fibonacci retracement from the 2009 high to the 2010 low around 1.3120 continue to hold up as near-term resistance, but an expansion in the Fed's open-ended asset purchase program may ultimately trigger a bullish breakout in the exchange rate as the FOMC continues to embark on its easing cycle.

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British Pound: To Maintain Range Ahead Of BoE Minutes, Jobless Claims On Tap

The British Pound advanced to 1.6100 during the overnight trade even as the Royal Institution of Chartered Surveyors'home price survey fell short of market expectations, and we may see the GBPUSD preserve the range-bound price action carried over from the end of November as market participants weigh the outlook for monetary policy.

With the Bank of England (BoE) scheduled to release the policy meeting minutes on December 19, the sterling looks poised to track sideways over the coming days, but the fresh batch of central bank rhetoric may reinforce a bullish outlook for the GBPUSD as the central bank appears to be slowly moving away from its easing cycle.

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In turn, the GBPUSD may continue track between 1.6000-1.6100 ahead of the BoE Minutes, and we should see the sterling consolidate over the next 24-hours of trading as the economic docket is expected to show another 7.0K in U.K. jobless claims.